PRC-PACIFIC ISLAND CONFERENCE: BUSINESS AND AID,

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 005362

SIPDIS

NOFORN
SIPDIS

DEPARTMENT FOR EAP/ANP, EAP/CM, EAP/RSP

E.O. 12958: DECL: 03/23/2016
TAGS: PREL EAID ETRD EFIS ECIN CH FJ PP TW
SUBJECT: PRC-PACIFIC ISLAND CONFERENCE: BUSINESS AND AID,
WITH TAIWAN IN THE BACKGROUND

REF: A. SUVA 00055


B. PORT MORESBY 00073

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Classified By: Political External Unit Chief Edgard Kagan. Reasons 1.4
(b) and (d).

Summary
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1. (C) PRC Premier Wen Jiabao will use the first visit by a
PRC Premier to a Pacific Island nation to launch a China-Fiji
co-hosted economic development and cooperation conference on
April 5, according to a MOFCOM American and Oceanian Affairs
Division Director. MOFCOM Minister Bo Xilai will join
regional ministers in signing a "Guiding Framework" on
economic cooperation, while Pacific Island and PRC businesses
will solidify business deals during the two-day event. Fiji
is the co-host after the Pacific Island Forum dropped its
official participation due to pressure from its members who
recognize Taiwan, although the MOFCOM official claimed some
have now decided to attend the conference. The Pacific
Island nations are looking for more PRC assistance, while
Beijing is pushing Chinese businesses to invest and secure
access to the region's natural resources. A New Zealand
Embassy political officer said China's sporadic assistance
focuses on "prestige" projects, while Taiwan is more
effective in using its money to line politicians' pockets.
Debate over playing the "recognition card" and the influx of
money from the PRC and Taiwan often leads to instability.
The New Zealand Embassy officer lamented that China's
"extractive" approach to the region's resources is "less than
responsible." An Australian Embassy officer commented that
Premier Wen will meet with all twelve heads of state or
government who plan to attend the conference, noting that
this alone will probably earn the gratitude of many Pacific
Island leaders. End summary.

PRC: Yearlong Effort Pays Off
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2. (C) On March 14 MOFCOM American and Oceanian Affairs
Division Director Liu Yi briefed Emboffs on the
"China-Pacific Island Countries Economic Development and
Cooperation Forum Ministerial Conference 2006" co-sponsored
by the PRC and Fiji that will be held in Nadi, Fiji on April
5-6. Liu said this event is the end-result of a yearlong
effort by China after first broaching the idea with the
Pacific island nations in February 2005. Beijing has sent
several advance teams to the area to help organize the event.
Overall, there has been a warm response from each of the
island nations, according to Liu. China expects to hold the
conference every two or three years, with the location
alternating between China and a Pacific Island nation.

Wen Jiabao: First PRC Premier to Visit Region
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3. (C) Liu said the event will coincide with the first
official visit by a PRC Premier to the Pacific Island region.
Premier Wen Jiabao will arrive in Fiji on April 4, the
second leg of a trip that will start in Australia and include
stops in New Zealand and Southeast Asia. Liu reported that
Premier Wen will hold bilateral meetings with Fiji leaders on
April 4 and then join heads of state from most of the
attending Pacific Island nations to open the conference on
April 5 before departing for New Zealand.

Ministerial and Business Meetings
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4. (C) Liu said the first day of the conference will also
include a ministerial conference, in which Minister of
Commerce Bo Xilai will participate. There will be seminars
on trade and investment, capacity building, tourism,
transportation and agriculture, including fisheries and
forestry. On the second day, Pacific island businesses will
meet with approximately 100 representatives from Chinese
businesses that are already invested in the area or are
interested in making Pacific island investments. Liu is
hopeful that these meetings will result in many new business
deals.


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"Guiding Framework" Meets PRC Interests
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5. (C) China expects to sign a ministerial-level "Guiding
Framework" with all of the attending Pacific Island nations.
Liu said all of the attending nations have already
"initialed" the non-binding document, which covers general
procedures to promote cooperation in trade and investment,
capacity building, tourism, transportation and agriculture,
including fisheries and forestry. The island nations are
interested in developing these areas and have requested PRC
assistance, according to Liu. China's interest is access to
the regional fishery, forestry and other natural resources,
Liu continued, while the Pacific island nations are most
interested in promoting their tourism industries, increasing
Chinese investment and securing more PRC assistance.

Nations That Recognize Taiwan to Attend?
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6. (C) Liu said China chose Fiji as a co-host due to Fiji's
central location among the Pacific island nations, relatively
frequent flights and because it is the headquarters of the
Pacific Island Forum (PIF) Secretariat. When asked about
PIF's involvement, Liu admitted that China had originally
approached the PIF to co-host the event and the PIF
Secretariat had sent out invitations to all of its members.

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The PIF then "quit," however, after "some PIF members"
refused to attend, Liu said. When pressed, Liu admitted
that those PIF members were the ones that do not have
diplomatic relations with Beijing, though she added that some
of the nations that recognize Taiwan have now decided to
attend the Conference nonetheless. Liu said she had heard
that Taiwan would be "doing something" in reaction to the
conference but she refused to give any details.

PRC Assistance Insufficient; Businesses Being Encouraged
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7. (C) Commenting on the level of assistance the PRC
provides to the region, Liu said there is only so much
Beijing can do with its limited resources, especially since
other regions of the world, like Africa, Latin America and
Southeast Asia are more important and have a greater need.
Nonetheless, China feels it must try to meet the island
nations' demands and is pressing Chinese companies to
increase their investment in the island nations in order to
make up for the shortfall. Liu said that China, besides
providing training and other capacity building programs, has
built roads, hospitals, transportation systems and sports
facilities and arenas. Liu said China had recently responded
to Samoa's need and built a new stadium specifically for the
upcoming South Pacific Island Games in Samoa.

The View from New Zealand
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8. (C/NF) During a separate meeting, New Zealand Embassy
Political Officer Grahame Morton provided Poloff his
perspectives on the conference and the PRC-Taiwan rivalry in
the region. Morton said the "Guiding Framework" for
China-Pacific Island cooperation is very similar to the
agreements China signed with Africa, the Caribbean and Latin
America. Morton expects Beijing to follow-up by using the
document as a road map for PRC involvement in the region.
China will foot the airfare and hotel bill for the island
nations' conference participants, which is keeping with
fairly standard practice for the region, according to Morton.
Besides saving the island nations money, this also provides
cover for the bureaucrats and politicians from criticism of
their frequent travel and use of government funds. Australia
and New Zealand will attend, after coordinating the level of
participation with each other. Neither expects to rock the
boat, but rather will be interested in China's actions and
tone during the event, according to Morton. Details are
still scant, Morton continued, but Taiwan is reportedly
planning its own conference in July.


9. (C/NF) Morton said that Taiwan's efforts in the region
have been comparatively more active and skillful, putting
more money, by way of official assistance and private
investment, into the island nations. Taiwan is also more apt

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to engage in less scrupulous activities, continued Morton,
including bribing politicians and government officials and
directing assistance into projects they specify. PRC
assistance, lagging behind Taiwan's both in terms of volume
and quality, largely focuses on high profile, prestige
projects like sports stadiums, courthouses, government
buildings and official residences. Unlike Taipei or Tokyo's
assistance programs, Beijing opts to bring in work crews from
the Mainland, rather than hiring local workers, Morton
observed.


10. (C/NF) Morton commented that Beijing's assistance and
economic support directed at the Pacific nations is sporadic
and inconsistent, with significant upward spikes if there is
a switch of recognition, or even a rumor to that effect. The
island nations are not shy about playing this card, with area
politicians regularly debating the timing and amount of the
expected windfall. Often this debate causes instability in
the shaky island nations' governments, Morton lamented, as
political factions stake out positions, bribes flow into
pockets and scandals flourish as politicians see
opportunities to drag opponents through the mud.


11. (C/NF) Morton said New Zealand's main regional interests
are to promote stable governments, conserve the area's
natural resources and encourage the economic development of
its island neighbors. Beijing views the area quite
differently. Competition with Taiwan for recognition is
paramount. Economically, China is largely extractive in its
approach, despite lip service to "sustainable development."
Morton said New Zealand finds China acting in less than a
responsible fashion, as Beijing tends to extract rather than
conserve resources, causes political instability by putting
on the pressure over Taiwan and focuses overly on "prestige"
projects as opposed to the real economic development needs of
the area. NZ recognizes that it does not have the power to
keep China out of the region nor is it in a position to
lecture China about being a "responsible stakeholder." The
best New Zealand can do is to engage in a dialogue with China
and seek areas of cooperation, Morton concluded.

Australian: Wen Gives Face to Pacific Island Leaders
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12. (C/NF) Australian Embassy Political Officer Scott Dewar
told Poloff March 17 that Canberra appears to be keeping a
watchful eye on Wen's trip, which will follow immediately his
April 1-4 visit to Perth and Canberra. Dewar said that Wen
will meet with all twelve of the Pacific island heads of
state or government who will participate in the conference,
commenting that his willingness to meet these leaders should
carry great weight with them. Dewar commented that the PRC
is well aware of the impact of giving good treatment to the
leader of a small country.

RANDT